After the disclosure of the annual report in 2021, at present, 42 companies in Shanghai and Shenzhen have touched compulsory delisting, setting a record high for a shares. 2022 is expected to be the year of delisting.
Among them, 18 companies in Shanghai stock market touch delisting, accounting for 45% of the number of ST Companies in Shanghai stock market; 24 companies in Shenzhen have been delisted, accounting for 35% of the number of ST Companies in Shenzhen. A total of 40 companies in Shanghai and Shenzhen touched on financial delisting, accounting for 95%.
In the view of many insiders, the number of companies involved in delisting has increased since this year. On the one hand, it is related to the remarkable effect of the new delisting regulations. After the delisting risk warning will be implemented for financial indicators in 2021, various financial indicators will be cross applied in 2022, and if any indicator fails to meet the standard, it will be delisted directly; On the other hand, with the continuous expansion of the pilot reform of the registration system and the continuous improvement of marketization and legalization, the cost and risk of financial fraud of shell companies have increased significantly, so as to give up the struggle and enter more delisting channels.
“With the continuous promotion of strict supervision, the number of delisting companies may rise further in the future. With the increasingly smooth export of the capital market, investors should adjust their investment ideas in time and abandon the trend of speculation, otherwise they are likely to face heavy losses.” Some market participants warned that.
95% companies touch the financial delisting index
Among the 42 listed companies involved in compulsory delisting, 40 companies involved in financial delisting, accounting for 95%; In addition, one company involved in major illegal delisting and one company involved in face value delisting.
Specifically, among the 18 companies involved in delisting in Shanghai stock market, according to the principle of first touch and first application, 8 companies touched a financial index and delisted. Among them, Cred Holding Co.Ltd(600890) , Hubei Wuchangyu Co.Ltd(600275) , Xiamen Overseas Chinese Electronic Co.Ltd(600870) , Shanghai Greencourt Investment Group Co.Ltd(600695) , Shanghai U9 Game Co.Ltd(600652) , Shanghai U9 Game Co.Ltd(600652) 5 companies touch delisting because their revenue is less than 100 million yuan and their net profit after deduction is negative Xishui Strong Year Co.Ltd Inner Mongolia(600291) , Lanhai Medical Investment Co.Ltd(600896) , Hna Innovation Co.Ltd(600555) is due to the financial delisting caused by the non-standard audit opinion issued by the accountant.
Six companies touched on two financial indicators: Xinjiang La Chapelle Fashion Co.Ltd(603157) , Easy Visible Supply Chain Management Co.Ltd(600093) , Zhongxing Tianheng Energy Technology (Beijing)Co.Ltd(600856) because the fundamentals did not improve in 2021, the net assets continued to be negative and the accountants issued non-standard audit opinions Baotou Tomorrow Technology Co.Ltd(600091) , Lawton Development Co.Ltd(600209) , Shandong Jintai Group Co.Ltd(600385) not only the revenue is less than 100 million yuan and the net profit after deduction is negative, but also the accountant issued a non-standard audit opinion.
While Chunghsin Technology Group Co.Ltd(603996) has touched three financial indicators for two consecutive years, the company has lost the ability of sustainable operation, has been shut down since the beginning of 2020, and the income after deduction in 2020 and 2021 is 0.
In addition, due to the failure to disclose the audited annual report on schedule, Shangying Global Co.Ltd(600146) touched on financial delisting. In 2020, the company’s stock was subject to delisting risk warning in 2021 because the operating income was less than 100 million yuan after deduction and the deduction of non net profit was negative. On April 30, 2022, the company was unable to disclose periodic reports within the statutory time limit. At present, the trading of the company’s shares has been suspended, waiting for the exchange to make a decision on whether to terminate the listing.
Xin Jiang Ready Health Industry Co.Ltd(600090) also failed to disclose the annual report on schedule because it was too late to hire an accountant, and first touched on the financial delisting without annual report. In fact, Xin Jiang Ready Health Industry Co.Ltd(600090) may also involve major illegal delisting. At present, we have received the decision on administrative punishment from the CSRC. In accordance with the principle of first touch, first application, the Shanghai Stock Exchange has issued a prior notice of financial delisting.
Easy Visible Supply Chain Management Co.Ltd(600093) mentioned above is also a similar situation. According to the principle of “touch first, apply first”, the financial compulsory delisting procedure has been started. In addition, the company received the advance notice of administrative punishment and market prohibition issued by the CSRC on April 19, suspected of false records and major omissions in the regular reports from 2015 to 2020, and failed to disclose the 2020 annual report on schedule, which may touch on major illegal delisting.
Compared with the above two companies, Xinjiang Yilu Wanyuan Industrial Investment Holding Co.Ltd(600145) has touched a major illegal delisting and has been delisted. The company is a typical shell company in Shanghai stock market. It has made financial fraud for many years and was issued an administrative punishment letter by the CSRC.
Among the 24 companies involved in delisting in Shenzhen, 9 companies involved in delisting solely because of the non-standard audit opinion issued by the accountant; Two companies were delisted because their net profit after deduction was negative and their operating income was less than 100 million yuan.
Eight companies hit two financial indicators. Among them, three companies were delisted because their net profit after deduction was negative and their operating income was less than 100 million yuan + they were issued non-standard audit opinions; Four companies were delisted because they were issued audit opinions that could not express opinions + negative net assets at the end of the period; One company ( Northeast Electric Development Company Limited(000585) ) was delisted because its net profit after deduction was negative and its operating income was less than 100 million yuan + its net assets at the end of the period were negative.
Huaxun Fangzhou Co.Ltd(000687) , Great Wall International Acg Co.Ltd(000835) are delisted due to three indicators, namely: the audit opinion issued without an opinion + the net profit after deduction is negative, and the operating income is less than 100 million yuan + the net assets at the end of the period are negative.
In addition, one company ( Boomsense Technology Co.Ltd(300312) ) determined that it was unable to disclose its annual report within the statutory time limit, one company ( Egls Co.Ltd(002619) ) withdrew from the market due to its par value, and one company ( Dea General Aviation Holding Co.Ltd(002260) ) was rejected by the municipal Party committee due to its application for resumption of listing.
delisting new regulations take effect
In recent years, compulsory delisting has become the mainstream of the A-share market, reaching a record high in 2022. Since this year, 42 companies have been involved in compulsory delisting alone, exceeding the number of delisting companies in the whole year of last year (20), most of which have been involved in financial delisting.
“The increase in the number of delisting companies this year is due to China’s strict and serious implementation of the ‘new delisting regulations’ and no extra legal leniency to those who impact the financial delisting standards. At the same time, there are more companies that touch the financial delisting, which is also an embodiment of the fundamentals of China’s real economy and the actual situation of enterprise operation.” Tian Lihui, Dean of the Institute of financial development of Nankai University and Dean of the China ASEAN Institute of financial cooperation, said.
According to the analysis of the first financial reporter, after the introduction of the new delisting regulations at the end of 2020, if the financial reports of listed companies touch the relevant circumstances of the new delisting regulations, they will be implemented ST in 2021. If the financial delisting is still touched in 2021, and the suspension of listing is cancelled, the relevant companies will be directly delisted in 2022, This means that 2022 is a year in which the financial delisting indicators in the new delisting regulations focus on showing efficiency.
It is worth noting that the new regulations on delisting have set up a standard mechanism for deduction of operating income. In the deduction of revenue, there are complex income deduction items such as new trade income and unstable business model. In order to improve the enforceability of financial delisting indicators and implement the new regulations on delisting, on November 19, 2021, the Shanghai and Shenzhen stock exchanges issued guidelines to refine this deduction standard, such as refining the deduction requirements for trade and financial businesses, and clarifying the deduction of the income obtained from the merger of abnormal transactions.
According to the above-mentioned institutions, in fact, after deducting the non main business income and non commercial income of some listed companies, the shell face of these companies will be uncovered, which is conducive to frame out whether they touch the delisting index, making it difficult for shell companies on the edge of delisting to play tricks on their revenue.
Behind the effectiveness of the new delisting regulations, it is inseparable from the high-pressure situation of “zero tolerance” of financial fraud, malicious avoidance of delisting and other behaviors, which continuously compresses the living space of such behaviors.
According to the first financial reporter, after sorting out the high-risk companies that may terminate the listing and touch the delisting risk warning, the regulatory parties will communicate and train with local governments, listed companies and intermediaries to clarify the expectations of all parties. For listed companies suspected of evading delisting, the exchange will inquire in time. If problems are found in the inquiry, the procedure will start on-site inspection to form a clear conclusion.
Public information also shows that the exchange has repeatedly issued inquiry letters to the above-mentioned companies involved in delisting, focused on the review of annual reports, urged listed companies to give tips on major delisting risks, and interviewed relevant companies and accountants for many times.
At the same time, in the process of compacting and tightening the responsibilities of intermediaries, the check strength of intermediaries is also increasing. For example, Xiamen Overseas Chinese Electronic Co.Ltd(600870) 2021 added frozen beef business. Due to the low stability of customer structure, low gross profit margin and business funds provided by major shareholders, a stable business model cannot be formed. The accounting firm believes that this part of income unrelated to the main business should be deducted, and the amount after deduction is zero, and the company’s net profit after deduction in 2021 is negative, which touches delisting. Of course, there are also intermediaries who are held accountable after the event without due diligence.
a-share market ecology is changing
In the case of “diversified imports”, the “export” is also expanding. In this case, how will the ecology of the A-share market change?
Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, told the first financial reporter that with the continuous expansion of the pilot reform of the A-share market registration system, the inclusiveness and openness of the market have been continuously improved, and the degree of marketization and legalization has also been continuously strengthened. Especially under the strong deterrence of the new securities law and the criminal law amendment (11), the cost and risk of financial fraud of listed companies have increased significantly, so zombie enterprises and shell enterprises show their true colors.
“At the same time, in the process of deepening the reform of the registration system, the door of IPO is opening more and more, and the listing cost is getting lower and lower. Compliant enterprises generally go to the door of IPO for listing. This makes the value of shell companies shrink continuously, give up the struggle, and more will directly enter the delisting channel. In this way, the efficiency of delisting will be greatly improved, and the number of delisting companies will continue to rise.” Dong Dengxin said.
Tian Lihui also believes that the increase in the number of delisting companies is the result of market competition and the survival of the fittest. Facing the severe external impact in the past two years, the core competitiveness of enterprises has been more fully demonstrated. Enterprises with governance level, operation efficiency and product prospects can often regard the crisis as a turning point, carry out capital restructuring and expand market share. Some enterprises with insufficient internal power will fall under the external impact. Timely delisting can improve the overall quality of listed companies, promote high-quality development and realize the optimization of the capital market ecosystem.
In addition, in Dong Dengxin’s view, the delisting of junk stocks is also a kind of protection for investors, and under the one yuan delisting standard, investors have more and more risk awareness and the ability to vote with their feet, which is also a manifestation of the continuous maturity of the A-share market and investors.
